Validian Corp (OTCMKTS:VLDI) Catches A Boost

Validian Corp (OTCMKTS:VLDI) climbed an impressive 40% up the charts yesterday, after announcing that it has managed to get its hands on some fresh funds. 

The funding in question came in the form of $1.225 MILLION – which is expected to invigorate the company, maybe even bring it out of its idle underachiever state. In return, VLDI issued a bunch of preferred shares – but luckily for investors, the provisions of those don’t seem like they could be a threat to investor value any time soon.

This more or less explains the investors’ enthusiasm – because it is actually noteworthy news. After all, it’s not every day that a company like VLDI manages to secure funds without resorting to toxic funding.

Unfortunately, even with this latest cash infusion, the company’s situation looks pretty bleak. One look at its latest financial report yields the realization that this money is not likely to be enough to take VLDI far up the road to commercial success:

• Cash and cash equivalents – $6 thousand
• Total current liabilities – $11 MILLION
• No revenues
• Net loss – $0.8 million

This is where we get to the meat of the issue. Securing some funding is excellent news, but VLDI hasn’t really proved that it could achieve anything with the money. The debts it had to re-negotiate are a testament to the fact that it has had its hands on serious sums before, and the numbers given above are a testament to the fact that it has not managed to achieve anything of note with said money.

Re-negotiating the company’s debt to convert a more reasonable price also appears to be a step forward. However, that may well end up being a moot point, because VLDI has so much debt to its name that even under the new conditions said debt is still a major threat to investor value. For instance, after yesterday’s jump the VLDI stock is valued at almost $0.04. This means that about $4.5 million of its debt that now exists under the form of preferred shares can currently be converted into common shares at $0.03 and sold on the market for a profit about of 33%.

Long story short – VLDI is a company with a dubious past, and even though it has made some steps that appear to take it in the right direction, a closer examination of its affairs can’t help but lead to the conclusion that the measures taken are far from enough to solve the issues that still plague it.